Hungary's tax system is moving towards enhanced competitiveness, with additional tax cuts planned for 2025, according to Finance Minister Mihály Varga at the National Tax and Customs Administration (NAV) conference in Budapest.

“Strengthening competitiveness is the most important topic of Hungary’s EU presidency, and the tax system plays a crucial role in this,” he stated during the conference.

Since implementing tax-cutting policies in 2010, Hungary has made significant strides in reducing its tax deduction rate and has become one of the EU’s leading examples of “whitening” the economy.

Minister Varga stressed that enhanced tax collection efficiency has facilitated sustainable tax cuts, such as reducing VAT rates to 4.4% by 2021, nearly 18 percentage points lower than in 2010, Hungary Today reports.

“Furthermore, simplifying the tax system remains a priority, with the number of tax bands decreasing from 64 in 2010, to 54 in 2025, with potential for further reductions,” he went on to add.

Furthermore, taxes on labour in Hungary have been significantly reduced, with cuts of nearly 50% during the 2010s, shifting the focus toward consumption taxes. 

For single earners, the tax rate on average incomes fell from 53% to 41%, marking the largest reduction in the EU. 

In addition, Hungary retains a 9% corporate tax rate, the lowest in the EU. “Taxes on labour were practically halved, and this has supported businesses and employees alike,” commented Finance Minister Varga.

Hungary's tax system is a key element of its economic strategy, with Mihály Varga stressing the importance of balancing tax cuts with fiscal responsibility.

He said that “the budget balance must be preserved, but the efficient work of the tax office opens the way for further reductions.”

This approach, which combines competitiveness with fiscal stability, highlights Hungary's ongoing commitment to maintaining one of the most competitive tax systems in the EU.